By Mark Frost, Chronicle Editor
Glens Falls Hospital files its 2018 Internal Revenue Service 990 statement this week, and it shows improved financial performance — an $11.7-million gain for 2018 after a $34-million loss for 2017. But those numbers tell little of the story, because they are largely impacted by one-time transactions.
Last year, the hospital was deep in the red because of $39-million in unbilled services in the troubled switch-over to an information technology system provided by Cerner Corp.
The year’s revenue is boosted by $8.8-million in “proceeds from a legal settlement,” which hospital officials acknowledge involves its Cerner contract, plus a $24.9-million gain from the hospital’s sale of its dialysis center to a private provider.
Separate out the one-time gains and “we’re very proud of our operating performance in 2018,” hospital CEO Dianne Shugrue told The Chronicle. “It’s almost break-even, much better than the year before.”
She says their perpetual mission is to “figure out how to keep this big ocean liner fueled.”
William Powers, chairman of the hospital’s Board of Governors, said of the Cerner billing and accounting system, “At the end of the day the product worked well….It’s working as it should be.”
Mr. Powers said the $8.8-million gain in 2018 is “not the full settlement,” but he said a confidentiality agreement remains in effect. “Embedded in the numbers are going to be some elements of that settlement,” but that they won’t “necessarily be discoverable. It’s pretty esoteric.”
As for ongoing financial performance, Ms. Shugrue said, “We have been doing a lot of expense control” in a health care world that she said remains volatile and challenging. “We’re doing much better. It’s still tough sledding.”
As for 2019 finances, Ms. Shugrue said, “We had a very, very difficult first quarter. It’s all volume-based. The second quarter was much improved. The third had continued improvement. The first month of the fourth quarter is showing continued improvement.”
Ms. Shugrue said the first quarter was bad by comparison to last year because there was little flu in 2019 — “the vaccine worked well” — whereas flu in 2018 was severe, bad for the public, “good” for the hospital.
Ms. Shugrue said, “We actually expect that we will have an operating loss for 2019, but we think it will be better than anticipated.”
“Volume is a concern,” said Ms. Shagrue. “We’ve seen higher volatility in our volume than we have seen historically.”
She likened it to the extreme ups and downs of a “v-tach” — ventricular tachcardia, reflecting a fast heart rate.
“We can swing from 120 [inpatients] today and be at 183 tomorrow,” said Ms. Shugrue. “There are days we have 175 [patients] in the ED [emergency department] and there are days we have 100 ED patients. That’s the nature of our business.”
Mr. Powers, whose career was in the fuel industry, said, “Think about having this kind of volatility and how we are going to staff for that. They do a very good job.”
The dialysis decision
Ms. Shugrue and Mr. Powers said the hospital sold its dialysis service because of the onset of for-profit providers the hospital couldn’t compete with. Ms. Shugrue said the hospital might buy three dialysis machines and keep them 10 years. “They buy dialysis machines hundreds at a time.”
“We saw that the dialysis was value and its value was going to erode. That would have taken our business. We tried to leverage the asset that we had,” said Ms. Shugrue, while still assuring that area patients still have dialysis service available here.
Ms. Shugrue said hospital administrators’ focus is on: What are we essential at that no one else will offer them?
The Chronicle asked, given the hospital’s stated desire to focus on providing what others don’t, why it’s still involved in primary care competing with providers like Hudson Headwaters Health Network, which are advantaged as FQHC’s — Federally Qualified Health Centers.
“We can’t compete,” Ms. Shugrue said. “We have been reducing our primary care footprint. Right now we are maintaining the base we have.”
She said the hospital has ongoing discussions with Hudson Headwaters as well as with an FQHC based in Rutland that is also eyeing entry into this market.
But Ms. Shugrue said a hospital gains substantial revenue from providing primary care, known as “covered lives.”
“Some things you get paid per member per month….It’s hard to just give up our revenue stream coming in….If that went away tomorrow, that would be millions of dollars.”
She noted that “Saratoga Hospital has a large primary care network” and that once Glens Falls Hospital and Saratoga Hospital are under the same parent Albany Hospital, “a lot of things we’re going to be able to talk about,” including primary care.
Ms. Shugrue anticipates the Albany Med tie-up taking effect in approximately June 2020, assuming the state Department of Health okays the Certificate of Need and the Federal Trade Commission and U.S. Department of Justice give it the federal anti-trust nod under the Hart-Rodino-Scott law.
Glens Falls Hospital paid Hudson Headwaters $4.5-million in 2018 as the hospital’s biggest independent contractor.
Ms. Shugrue explained it’s the savings Hudson Headwaters receives for its oncology patients at the hospital under its federal 340B designation for discounted drugs.
Ms. Shugrue laments, “If we had one more patient a day on Medicaid, we would [qualify for 340B and] get $12-million” more in revenue.
Similarly, she says the hospital would also receive $12-million more if it were designated a “sole community provider.” It does not qualify because Saratoga Hospital is less than 25 miles away.
Ms. Shugrue said that the hospital, Rep. Elise Stefanik, New York’s U.S. Senator and the Hospital Association of New York State still seek the designation.
She notes that half of Glens Falls Hospital’s patients come from the north country. “We are their sole community provider.”
Salaries of key employees is another focus of the 990 report to the Internal Revenue Service. Ms. Shugrue said that the IRS requires detailing the salaries of the five highest paid people. “Last year we had nine,” she said. “We overreported. That didn’t serve us well. Now we’re going by the letter of the regulation.”
Mr. Powers said he’s heard some complaints about salaries of hospital executives, but he said the hospital contracts with an outside consultant to establish benchmark pay rates.
“Our policy is to fall at the 50 percent level of that range,” said Mr. Powers.
He points to an Albany Business Review listing of Highest-Paid Executives in the area and notes that seventh on the list is Albany Med CEO James Barba, with a base salary of $944,00 and total compensation of $1.845-million and 21st on the list is St. Peter’s Health Partners CEO Vincent Verdile with base of $620,465 and total compensation of $1.059-million.
“Just Missed” the top 25 included Saratoga Hospital CEO Angelo Carbone had total pay of $863,919; St. Mary’s Healthcare, Amsterdam, CEO Victor Giullanelli, $854,651; Nathan Littauer Hospital, Gloversville, CEO Laurence Kelly [Ms. Shugrue’s husband], $805,029; and Ellis Medicine, Schenectady, CEO Paul Milton, $777,801.
Ms. Shugrue’s compensation as listed in the 940 report is $670,846.
Glens Falls Hospital, with revenue of $368-million, is larger than the hospitals in Saratoga, Gloversville and Amsterdam.
Mr. Powers said of Ms. Shugrue, “She’s the lowest paid CEO and she’s a female. That gives us a little pause.”
While showing some clear defensiveness over The Post-Star’s non-stop attack on the hospital’s leadership, Mr. Powers eventually turns the conversation back to extolling “the care that the hospital gives to people that come here. That’s paramount to this administration, that’s paramount to this board.”
He talks about the hospital’s oncology providers, the use of immunotherapy and other techniques. “Really it is cutting edge stuff that you’d expect to see in a major academic medical center,” said Mr. Powers, whose own involvement on the Glens Falls Hospital board began after his wife was successfully treated for cancer here.
Ms. Shugrue talks of the availability of advanced medical trials, research protocols, proton therapy such as is used at MD Anderson Hospital in Houston. “It is Star Wars,” she says.
She said a new vision is evolving in health care nationally. “We’re not gonna get paid based on what we do [fee for service]. The more healthy you keep patients, you get paid for that.”
Copyright © 2019 Lone Oak Publishing Co., Inc. All Rights Reserved.